13
Jan

If you are a first time credit user, it may be a little difficult to build it up at first. This may be especially difficult if you are a student and you have never used a card before. Having a credit card is a lot of responsibility. You don't want to overspend and dig yourself in a hole. There are many ways a student or a first time credit card user can build up credit and achieve a good credit score. By trying a few of these tips, you will be able to have a healthy credit score in no time.

Credit basics
Before we begin offering ways to build credit, you should first know a few common things about credit. A credit score is one of the most important things to understand about credit. This is a three digit numerical expression that assess what type of credit card user you are. It is calculated based on payment history, how long you have had a credit line opened and how much your balance is. MyFico, which is one of the most commonly used credit score providers, has a helpful intro course about what the makeup of a credit score is. Many banks and credit issuers will look at your score to determine if you are accountable and will grant you a new line of credit. Now that you understand what your score is, you can begin building credit.

Authorized user
When first starting off to build credit, you may need to ask your parents for a little help. This is very common for first time users and there are ways you can build up credit on your parents account. Many times, parents will let their children be authorized users on their accounts. This option will let you use your parent's credit card while they are monitoring it. You can use the card to build credit, but your parents, granted they have good credit, will bestow their good credit upon you. This is an option that can help you learn the basics of credit and spend carefully.

Minimal spending
It is very common for consumers to get a credit card when they begin college. Being on your own at school may mean that your parents entrust you with the responsibility of opening up your own line of credit. Before you go buying expensive personal items for yourself, you should create a plan. You have to remember that whatever you spend on your credit card, you will then have to pay back. If you purchase a $5 sandwich from a restaurant, you will eventually need to pay that $5 back. As you begin using a card, start off by purchasing small items. School supplies may be the best area to start because they are mostly cheap and will not set you back too much. Keep an eye on your spending habits and make sure you don't run up your balance too quickly.

Making payments on time
Once you have gotten your credit card, you will receive a credit card statement every month. This document will include all of your purchases over a time period and your monthly payment. This minimum payment is due at a certain date during the month. Credit card issuers enact a minimum payment to make sure you are still using your card and you are fulfilling your part of the commitment with the bank. Also, making these payments is important because a good portion of your credit score is determined by your punctuality on payments. If you miss a payment, you will be charged a late fee and your credit score will get knocked down a few points. This step is one of the most important steps for a first time credit user because these fees can start to get expensive and can run up your balance. A good rule of thumb would be to set up a time each day to check your account. By checking your account a few times a week, you will be able to see your spending habits and make sure you are staying on top of your payments.

Things to avoid
When you are using a credit card for the first time and making bill payments on time, you may think that you have a handle on things. It is great that you are a responsible credit card user, but you do not want to bite off more than you can chew. During this time of building up credit, you want to avoid opening up any additional lines of credit. One credit card is a lot to handle and opening up a line of credit and increasing the balance can raise your credit utilization rate, another determining factor of your credit score. As you become a more seasoned credit card user, you should just stick to one card at first.